Recognizing Change When You See It

The Story of John Gokongwei

John Gokongwei was only 13 years old when his father died, living him the responsibility of
taking care of his mother and five younger siblings. Creditors had just seized their home as well as their
small business and he had no experience at all with how to earn a living.

On a speech to the graduating class of Ateneo de Manila University – John Gokongwei School of
Management, he mentioned that he was able to survive because he recognized change when he sees it.

The first change was World War II. He was already 15 and his mother already sent his younger
siblings to China where the cost of living was lower. He and his mother were living in Cebu back then
and had to send money to them.

He worked as a peddler. His days begin very early in the morning at 5:00 AM and would load his
bicycle with soap, thread, candles, and other enterprise. Then he would bike around the neighboring
towns to sell his goods. On market days, he would rent a small stall, lay out the goods from the bike, and
make about 20 pesos a day, enough for him to survive and to buy even more goods for next time. He
calls this times his BICYCLE AGE.

After about two years of bicycling and peddling, at 17 he entered his batel age. The batel is a
small boat that defied the open sea and would take him farther from Cebu and all the way to Lucena,
from where he would take a truck to Manila, with companions twice or thrice his age. The sea trips
could take two to three weeks depending on the weather, and the land trips another five to six hours.

He spent his free time while traveling reading books that are now considered as classics, like
Gone in the Wind, to pass away the time, even when he and his fellow traders were in constant fear of
sea pirates and the bad weather.

There was one instance when the batel hit a rock and sank. At that time, he was selling rubber
tires in Manila. They held on to those tires, which meant that he actually saves all those traders lives,
and at the same time they saved his tires.

At that time, the war was still on-going. While the others look back at the war with the worst
memories, for John it was different. It was a great equalizer. Almost everyone had lost big and small
fortunes at the time. That meant that they all started from the ground. Ground zero meant living by
their wits alone, starting equal, and this is where he discovered he was an entrepreneur.

He was 19 years old when the war ended. Because of the war the economy was more
dependent than ever on imports. So he set up his very first company, Amasia, to import textile
remnants, old newspapers and magazines, and used clothing from the United States of America. The
Batel Age was over. The Trading Age began.

By then, his siblings returned to the Philippines from China. Together, they worked on the
trading business that he started; as bodegeros, clerks, warehousemen, cashiers and collectors. And all
this time they were all still going to school. John had to stop schooling at this point. Like most Chinese-
Filipino families, they worked where they lived, and at times, they had to endure he stench of rotten
oranges and potatoes filling their two-storey apartment.
 By the early 1950’s they were importing cigarettes and whiskey as well and business was doing
good. But there were two factors that made him change strategies again. First, he saw that trading
would in time become a low-margin business because they were at the mercy of their suppliers and
buyers. Second, he saw that the government was working on import-substitution policies to encourage
local business. So he entered the Age of Manufacturing.

In 1957, he started a corn milling plant producing glucose and cornstarch. These products would
then be in great demand from better known businesses, like textiles, paper, ice cream, pharmaceuticals,
and beer.

He was able to secure a loan from China Bank, and there, Universal Corn Products, the
predecessor of Universal Robina Corporation, was born. But business was tough. Bigger players in the
cornstarch industry gave them a hard time by engaging in a price war. They tried to kill his business by
selling their products lower. But their business prevailed and started to get big clients like San Miguel
Corporation. But by the early 1960’s, cornstarch was becoming a commodity, and he saw that there was
no future in a business where they had to keep lowering margins to survive.

So, it was time to get into bigger, and riskier, game played by big multinational corporations. He
saw that all they did to capture the market was to brand their products. That is, they gave their coffee a
name, a face, and an image that customers would instantly recognize and identify with quality. And that
gave way to the Age of Brands.

They put up CFC, and their first successful product was Blend 45. They positioned it as the “poor
man’s coffee”, hired op movie star Susan Roces to endorse it, and employed Procter-and-Gamble
veterans to sell it. Basically, they took a page out of the multinational book, and applied it to their
business. They gave their coffee, snack food, candy, and chocolates a name, a face, an image. Today,
Jack and Jill, Max candy, and Cloud 9 have become household names.

At this time he was able to return to school for an MBA at the De La Salle University, and a 14-
week advanced management program at Harvard. Going back to the university for studies which was
interrupted by the war gave him an appreciation for the beauty and the breadth of business life.

The success of URC opened up many opportunities for his group. This started the Age of
Expansion. For the next two decades they pursued businesses in different fields. They went into textiles,
real state, telecommunications, aviation, banking, and petrochemicals. Robinsons Stores and Mall,
Digitel, Cebu Pacific Air and Universal Robina Corporation are now market leaders in their respective
fields.